Q&A: Mike Harris, Digital Asset Management, EDS

Last April, Electronic Data Systems launched a new
digital asset management practice within its media and entertainment group,
officially pitting the computer services giant against systems vendors and
outsourcing rivals IBM and HP . In the exploding world of digital media,
asset management is the buzzword for IT providers large and small, each
chasing a piece of the possibilities
that grow with each duplicated slice of digital media.

The move makes sense for EDS. While the last few years have brought shrinking IT budgets, the company has had to cope with mega-outsourcing contracts that have
become major headaches, such as a delayed $6.9 billion contract with the
U.S. Navy and bankruptcies of major clients WorldCom and US Airways.

internetnews.com recently spoke with Mike Harris, who heads up
EDS’s global media & entertainment industry group, about how the company is
positioning itself for a piece of the action with digital media asset
management, and how it plans to differentiate itself from rivals.

Q: What’s behind the launch of the digital asset management group and
how do you define the market?

This is a market that analysts are projecting, just for the solutions to
help manage digital media assets, at between $5 billion and $8 billion
annually. That’s just in developing the solutions. So it’s a pretty
substantial market in which we expect a 30 percent compound annual growth
rate.

But what is interesting to EDS, based on our core competency, is that
there is a pretty substantial market that is being defined around both
outsourcing for [digital asset management], such as data centers, and
servers, particularly around the management of asset repositories, and the
whole settlement process for rights management.

So we think of it as third-party clearing, but also first making it
accessible, helping to decide who’s using the assets and how they are using
them. And then in settlement, so that people are paying for what they are
consuming, as well as paying residual rights to the artists and [other
entities] involved.

We feel very well-positioned to help [address] concerns of content
providers: whether they have control over their assets, that they are
confident they can assure their talent that they do.

We’re very excited about developing and deploying [these] kinds of
solutions, running not only the technology involved but also the business
processes involved too.

We process some 13 billion transactions a day, so we feel we are very
well positioned for this. Beyond media and entertainment companies, we see
opportunities with financial services, with the government and military
sectors.

Q: Can you provide a scenario of what type of company might be
involved and what kind of services EDS would provide?

It would be in three categories, starting with management consulting
services to help clients conceptualize and figure out the business case for
storing, accessing and protecting their digital assets. You have to help
them figure out their business case, how to build the architecture involved
with managing the assets, and how to organize business units around a film
and film rights, for example.

Second, in a broad category, we also would be developing and delivering
solutions that will help [clients] manage the value chain.

[And third], we would manage or help manage the IT infrastructure, which
yes, could include managing a client’s server farm. But it might also come
back to thinking through what do you have to have, real-time [storage]
access vs. offline. That’s where we can provide end-to-end management of
every aspect of the process. We can design it, or help customers design it
and manage [these systems].

This is primarily about offering a solution set from existing
capabilities that help media and entertainment industry clients not only
reduce digital storage and transport costs, but also improve their
operational efficiencies, streamline collaboration efforts, and improve
speed to market for new and repackaged offerings.

We find that what’s lacking [for many media companies now] is the
integration of those assets, such as solutions for logging an analog form of
film and then digitizing it, creating a form so that I can, say, search and
retrieve portions of that film. We’ll help with good solutions for logging
and indexing, for building repositories for that, but what’s lacking is an
integration of those solutions in a clients’ enterprise.

Q: Can you talk more about the integration aspect involving digital
media?

Sure. This might involve working with an entertainment company with film
clips and stills that they use for licensing. So, let’s say the company has
implemented a solution for building a repository for those assets. Now, what
we’re doing is helping the client figure out how to use a [software
integration platform company] webMethods in order to tap into different sets
of asset repositories. We want to help them use those search tools with
taxonomies built for searching film clips, for example.

It also means working integrating processes from the original content
creation, all the way to [the process of] making it accessible, viewing it,
repurposing it, how to integrate those business process, but how to look
at opportunities for leveraging the content. There are various business
processes that are key to creating an end-to-end solution.

Q: What are you hearing from customers about how to approach their
digital assets? Is it how to bill for those bits and bytes, perhaps?

Frankly, what I hear, especially with prospective clients, is a lot less
concern around billing for distribution and consumption. Their biggest
concern is on the intellectual property side — tracking the content and
understanding what rights they have for its use, even within their own four
walls.

That is among their biggest concerns: that they understand their rights,
and, as things get developed, that they’ve worked out the appropriate
settlement on that content. If a company’s talent ever feels they weren’t
getting [their fair share of] royalties, that causes major problems in
keeping talent. So that is the biggest concern.

The IP rights issues come in two forms: rights around access and use and
rights around settlement back to the original content owners because right
now there isn’t a very good solution for most media and entertainment
companies. It is a different prospect and approach — content vs. IP — for
many parts of their business, in many cases, for good reason.

For example, now a company’s got a contract around a post-theater
release, which involves using content to create interactive games, or
leveraging the Internet to provide access to the content as part of some
tie-in, or maybe it’s targeting kids in a McDonald’s promotion.

You have to restructure contracts. And that’s where very general
contracts become complex, when the content comes in forms that maybe they
haven’t considered today. With the original content, who owns the right to
segment that original product? That’s the part in business models and
business issues that needs to be addressed. It’s about rethinking different
parts of the business.

Most [media] organizations are focused on physical asset management,
primarily driven by libraries that were concerned for example about film
disintegration. Now they’re getting digital repositories built, they are
at the stage of saying ‘how do you really monetize these assets beyond the
form they are in today?’ There are whole new ways of creating products and
services, and ways to go to market.

So, they have started bumping up against each other, the copyright protection as
well as how do they start thinking from the outset of the original contract.
If you think of how a film starts, from the initial concept then to a story,
the licensing typically follows DVD and VHS and other windows of release
after theaters.

You can look at new examples like [video on demand site] movielink and
see how the [studios] are trying to get ahead of what happened in the music
industry with Napster. They know they have to get ahead of [digital media],
but are thinking through how business models need to change, and how
contractual models need to change. It’s not just technology, but business
issues involved.

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